The paper is to present a theory consistent with the stylised facts that employment and wages in the manufacturing sectors of the developed nations decline. It focuses on a world of multinational corporations where capital and technology are increasingly mobil.

In this paper, by using a generalized Harris-Todaro model that incorporates an urban non-polluting sector, and supposes a dual economy inherent in an LDC, we examine the backward incidence of pollution control on some key variables of interest. Given a relatively capital intensive polluting...